THURSDAY JUNE 18: Finance Bill 2015: Senate asks government to withdraw FBR's powers to access bank accounts

ISLAMABAD: The Senate has recommended National Assembly changes in the Finance Bill (2015) to impose 2.5 percent on investors to regularise their un-declared money; withdraw FBR's powers to access bank accounts; advance tax on banking transactions with a minimum threshold of Rs 50,000 (cross cheques, DD, PO, CDR etc) applicable to non-filers and allow import of five year reconditioned/old cars.
The Deputy Speaker of National Assembly presented the Senate recommendations in the lower house and sought parliamentarians' proposals on these recommendations. The proposals would be taken up by the National Assembly Standing Committee on Finance. In pursuance of sub-rule (2) of rule 141 of the Rules of Procedure and Conduct of Business in the National Assembly, recommendations have been received from the Senate in pursuance of proviso to clause (1) of Article 73 of the Constitution, on the Finance Bill, 2015 containing the Annual Budget Statement, transmitted to it on June 5, 2015.
One of the key recommendations is that an increase of 12.5% be made in pay and pensions after the ad hoc allowances have been merged in the basic pay of all government employees. Another key recommendation is that the difference in sales tax slab on textile sector for the regulated sales tax registered persons and sales tax non-registered persons be brought at 1%. Other recommendations included an increase in Federal Excise Duty (FED) on cigarettes from 58% to 70% and reintroduction of the Tax Reform Bill and period of tax exemption announced for KPK be increased from 1.7.2015 to 30.6.2020. The concessions for establishment of units all over the country be extended till the year 2017 and tax holiday for Balochistan be provided, as proposed for the KPK industry.
The Senate has recommended to the National Assembly that Income Tax Ordinance, Section 5A, in its present form should be withdrawn and transfers to reserves be taxed if the company has not distributed 40% of the income in that year as dividends.
Senate has recommended withdrawal of the proposed amendment to give benefit to companies retrospectively. Section 153 (3) of Income Tax Ordinance was amended in 2009 to levy a 6% final/minimum tax on service providing companies including mobile companies without adjustable proviso. Now to give benefit to these companies, they have been exempted and that too from 2009. Retrospect benefit to individuals against the state is unprecedented. Annual Loss will be plus Rs 30 billion, accumulated loss from 2009 will be about 125 billion. Therefore, the Senate recommends to the National Assembly that the said provision may be revoked.
Senate further recommended that mobile phone sets of value upto Rs 5000 be exempted from GST as mobile phones are a necessity particularly for the poor and people living in far flung areas of the country. Moreover, GST on fertilisers be withdrawn covering Urea, DAP, NPK, Potash (SOP) and Zink.
The Senate recommends to the National Assembly to increase the RD on Bars from 15% to 35% and Steel Billets from 15% to 25%. Also, 5% RD on Steel Scrap be removed. The Senate recommends to the National Assembly that DRI (Direct Reduced Iron) imports should be taxed at the same rates of customs duty and sales tax as those for Steel Melting Scrap.
The Senate recommends to the National Assembly that Steel Industry be exempted from all taxes including Sales Tax on the import of plant and equipment. The Senate recommends to the National Assembly that in the Finance Bill, 2015 clause (16A) of Part IV of the Second Schedule to the Income Tax Ordinance, 2001 should be reinstated,
According to the recommendations of Senate to National Assembly, sales tax be abolished on locally manufactured agricultural machinery so that farm machinery which is locally produced can be made available to the farming community at affordable prices.
The Senate recommends to the National Assembly that the advance tax on banking transactions with a minimum threshold of Rs 50,000 (cross cheques, DD, PO, CDR etc) should be applicable to non-filers. Senate has recommended National Assembly that in the Income Tax Ordinance 2001, the benefit of Section 65E may be extended till June 30, 2018, as the large scale industry execution timeline is over 2 years to reach commercial production levels. Income Tax Ordinance, Section 65 (B) which is expiring on June 30, 2015, be extended till June 30, 2018.
Senate has recommended to National Assembly that in the Income Tax Ordinance 2001, the benefit of Section 65E may be extended till June 30, 2018, as the large scale industry execution timeline is over 2 years to reach commercial production levels. The Senate recommends to the National Assembly that only 2% duty on import of Euro-II/ Euro-III may be imposed and sales tax be exempted, irrespective of the horsepower in order to ensure supply of quality tractors to the farming community.
It recommended to the National Assembly that only 2% duty on all poultry plant equipment and machinery may be imposed and exemption on sales tax be provided. Senate has recommended to National Assembly that only 2% duty be imposed and sales tax exemption should be incorporated in the tax laws for setting up manufacturing facilities for modern watering technologies like sprinkler and drip irrigation. Senate recommended to the National Assembly that the FBR must withdraw the applicability of 5% sales tax on reclaimed lead if sold to recognised battery manufacturers.
Senate recommended to National Assembly that rates of customs duty on parts and finished items should not be the same, as recommended by the National Tariff Commission. It recommended to National Assembly that to increase the RD on Bars from 15% to 35% and Steel Billets from 15% to 25%. Also, 5% RD on Steel Scrap be removed. The Senate recommended to the National Assembly that the budgetary proposals, especially the PSDP/annual plan may be presented to the concerned Committee of both Houses at least four weeks before laying the budget in the House. Also, all Legislators should be given sufficient time and provided details to make recommendations.
The Senate recommended to the National Assembly that the PSDP should be reviewed and re-appropriated according to Article 156(2) of the Constitution in order to make appropriate allocation for completing the already started projects in all provinces and Federal Administered Areas. The Senate recommends to the National Assembly that the decision taken on 28th May, 2015 in the APC with regard to the Western Route of CPEC be implemented in letter and spirit and reflected in the Budget, 2015-16. It was approved by the Prime Minister in the APC that the western route will be developed first and all financial resources will be allocated to this route, which does not reflect in the PSDP.
The Senate recommends to the National Assembly that a receiving copy from Afghan border customs may be made compulsory to ensure proper export of goods at the Pak-Afghan border. This measure will also increase the tax revenue of the government. The Senate recommends to the National Assembly for the withdrawal of GST imposed on pesticides and herbicides/weedicides which has resultantly increased the cost of production of various crops and affected the farming community in Pakistan. This has resulted in increasing food insecurity and poverty in the country. The Senate recommends to the National Assembly for allocation of funding for the strengthening/up-gradation of Arid Zone Research Institute located at Umarkot, Sindh.
The Senate recommends to the National Assembly for grant of a subsidy on electricity tariff used for lift machines and other pumps for lifting water for agricultural purposes. The Senate recommends to the National Assembly that the Ministry of Finance may present broad parameters of the Budget in March every year and detailed budget by mid May every year in both Houses of the Parliament for pre-budget discussion.
The Senate recommends to the National Assembly that a special allocation may be made in the Budget for the martyrs of the Army Public School Peshawar (both staff and students) and this money should be disbursed at the earliest to the families (kith and kin) those who laid down their lives during the brutal terror attack of December 16, 2014. There should also be compensation for those who were wounded in the attack.
The Senate recommends to the National Assembly that mid-year budget review may be made mandatory and should be done each year in the month of February in the Parliament for purposeful discussion and input. The Senate recommends to the National Assembly that all international loans and economic agreements may be placed before the Parliament for information. The Senate recommends to the National Assembly that in order to promote industrialisation, the Federal Government may announce subsidised long term fixed mark-up loans to set-up new industrial units in the country to promote industrialisation. IDBP should not be wound up and be revived instead to help promote industrialisation.
The Senate recommends to the National Assembly that the Government may allocate appropriate funds from BISF for elderly citizens also. The Government should also arrange an external independent audit and recipients' verification of BISF immediately in order to ensure transparency and to eliminate undeserved/non-qualified recipients. The Senate recommends to the National Assembly that subject to the consent of provinces in CCI, the Federal Government should devolve all Discos to the provinces in order to rationalise energy cost.
The Senate recommends to the National Assembly that a single "Energy Ministry" be created by merging different Federal Ministries dealing with the subject, in order to fast track actions on ongoing issues relating to energy. The Senate recommends to the National Assembly that the federal government may forthwith stop the load shedding of gas and electricity for industrial estates.
The Senate recommends to the National Assembly that the import of five year reconditioned/old cars may be allowed. The Senate recommends to the National Assembly that rates in PIA long routes, short routes and socio economic routes may be decreased and fares in economy, economy plus, club, business and first class may also be decreased. The Senate recommends to the National Assembly that the allocation for the FATA University in the budget be increased so as to start a meaningful work on the project and also to bring the tribal areas into the national mainstream. The Senate recommends to the National Assembly that Pak currency be allowed instead of dollar w.e.f. 1-7-2015 against exports from the whole country of Pakistan to Afghanistan of perishable goods 'namely fruits, vegetables, dairy products and meat, as proposed for Khyber Pakhtunkhwa.
The Senate recommends to the National Assembly that banking companies be mandated to achieve a minimum level of 15% share of their portfolios to SMEs. SME bank may also be reactivated and its capital be increased to service the SME sector. The Senate recommends to the National Assembly that the lowest Slab for A1 General Tariff for residential consumers be increased from 50 units to 150 units. The Senate recommends to the National Assembly that all FBR communications be in Urdu language in addition to the English language.
The Senate recommends to the National Assembly that all subsidies be assessed to determine whether they reach the common man. Also, a Commission be constituted for this purpose, which will submit its report to the Government within 90 days. The Senate recommends to the National Assembly that the monthly instalment under the Benazir Income Support Program be increased to Rs 1700 and the number of families may also be increased in the programme. The Senate recommends to the National Assembly that FATA and Gilgit Baltistan be given Financial Autonomy and special development packages.
The Senate recommends to the National Assembly that the employees of the Senate Secretariat may also be granted an honorarium as a reward for their hard work during the Budget Session like the National Assembly Secretariat employees. The Senate recommends to the National Assembly that members of the Senate should also be granted exactly the same amount of development funds as the members of National Assembly.
The Senate recommends to the National Assembly that in Section 5 (59) (x) of the Finance Bill, 2015 inserting clause (142) of Part I of the Second Schedule be approved with the following wording: "(142) Income derived by Balochistan Employees' Social Security Institution, Employees' Social Security Institution Khyber Pakhtunkhwa, Punjab Employees' Social Security Institution and Sindh Employees' Social Security Institution."
The Senate recommends to the National Assembly that in the Finance Bill 2015, Section 58 (C) (a) (ii) (b) the following amendment be made: 'Provided that the rate of tax required to be deducted by a collective investment scheme, REIT Scheme or a mutual fund shall be-'.
The Senate recommends to the National Assembly that in case of FMCG and other products, customs duty on certain finished goods is proposed to be greater than the customs duties on raw material. Therefore, this anomaly be removed for domestic manufacturing to survive. The Senate recommends to the National Assembly that subsidies and other incentives be given on solar tube wells to encourage their use and resultant energy conservation. The Senate recommends to the National Assembly that the number of PIU for the agricultural sector may be increased from 2000 to 4000.
The Senate recommends to the National Assembly that industries for mobile phones and other such products that are not being manufactured in Pakistan must be given priority and granted pioneer status. The Senate recommends to the National Assembly that all insurance schemes in the agricultural sector be introduced on Takaful basis. The Senate recommends to the National Assembly that Medical Allowance for all government employees along with pensioners be increased by 100% and the minimum level of pension for the pensioners be increased from Rs 6000 to Rs 8000.
The Senate recommends to the National Assembly that the house hiring allowance of government employees be adjusted according to the prevailing market rates and monthly payments be made. The Senate recommends to the National Assembly that all the disabled persons working on contract basis in the whole country be regularised and their minimum wages be increased by 20%.
The Senate recommends to the National Assembly that Tariff Determination Policy of NEPRA be changed, so that a minimum upfront tariff of Rs 10 per KWH be declared irrespective of the ROI. This would increase focus on cost effective technologies for power production. Furthermore, Customs Duty and Sales Tax at import or local purchase of machinery or low cost energy producing technologies be introduced. The Senate recommends to the National Assembly that amendments made to the Financial Institutions Recovery of Finance Ordinance, 2001 finalised by the State Bank of Pakistan be approved by the National Assembly to enable the banking industry to provide mortgage loans.